The federal Eighth Circuit Court of Appeals issued one of the first decisions in the country dealing with how the Fair Labor Standards Act’s (FLSA) “trade time” rules work. The case involved firefighters for the City of Aberdeen, South Dakota.
The firefighters were often scheduled to work more hours than the FLSA permits an employee to work without receiving overtime pay. On some of those occasions, the firefighters would ask other employees to work shifts on their behalf.
When a shift trade occurred, Firefighter A would agree to work a shift normally scheduled for Firefighter B. Had Firefighter B actually worked the shift, the hours on the shift would have had to have been compensated at the overtime rate under the FLSA, given the other hours worked by Firefighter B during the work period.
The lawsuit arose when the City did not pay Firefighter A for the trade shift, and paid Firefighter B for the trade shift only at the straight-time rate. The firefighters sued, contending that a federal regulation entitled them to the same amount of overtime pay they would have otherwise received when substitutes worked their shifts for them.
The Court upheld the firefighters’ position. The Court started by turning to the portion of the FLSA dealing with trade time, Section 7(p) of the FLSA. Section 7(p) provides that when a public employee works a shift for another employee, “the hours such employee worked as a substitute shall be excluded by the public agency in the calculation of the hours for which the employee is entitled to overtime compensation.” A Department of Labor regulation states that when one employee substitutes for another the hours worked are excluded from the hours “for which the substituting employee would otherwise be entitled to overtime compensation,” and “each employee will be credited as if he or she had worked his or her normal work schedule for that shift.”
The Court also examined the legislative history surrounding Section 7(p). The Court cited the reports issued by the House and Senate explaining that under Section 7(p), “if two employees trade hours, each employee will be credited as if he or she worked his or her normal work schedule.” In the eyes of the Court, “this is a clear indication that the purpose of Section 7(p) was to fashion a way to allow voluntary substitutions without having overtime costs spiral out of control. By having the employer credit each employee for the shift to which he or she was scheduled, the law limits the amount that an employer will have to pay in overtime wages to no more than it would have paid absent the voluntary shift substitutions. The Department of Labor’s regulation is therefore fully consistent with the expressed intent of Congress.”
With these preliminary matters out of the way, the Court then turned to the most fundamental question in the case – what did the Department of Labor’s regulation mean when it said that each employee would be “credited” with hours worked. The City argued that the word “credited” required it to give the scheduled employee only normal wages for the shift; the firefighters argued that the word “credited” meant the employer had to treat the scheduled employee in all respects as if he or she had worked the shift, including paying him or her overtime wages if otherwise warranted. The Department of Labor submitted an “amicus” brief advocating the position taken by the firefighters.
The Court found that the Department of Labor’s interpretation of its own regulation was not “plainly erroneous or inconsistent.” The Court also commented that “we do not see much merit in the City’s argument that the Department of Labor’s interpretation creates an unreasonable burden on employers. All the City has to do is pay the scheduled employee as if he or she had worked the scheduled shift; it need not keep any additional records. And the City need not monitor all shift exchanges, because any voluntary substitutions that take place will not cause the employer’s actual overtime expenditures to vary from the expectations that it developed when it first scheduled the employees.”
Senger v. City of Aberdeen, South Dakota, 2006 WL 2787852 (8th Cir. 2006).
This article appears in the November 2006 issue